Focus on renewable energy technologies’ competitiveness

Due to the combat on climate change, the role of renewable energy has increased significantly over the past decade. Despite solar and wind taking most of the headlines, according to REN21 Renewables 2018 Global Status Report, about a third of the world’s renewable energy consumption is still based on modern bioenergy. The increase of renewable energy is closely related to competitive technologies. Therefore, I am happy to see that there are active discussions ongoing about the competitiveness of renewable energy technologies in the EU at several levels.

During the past months, the European Commission has been organizing a series of meetings under the Clean Energy Industrial Forum to further support the EU industry to take advantage of the growth opportunities arising as part of the energy transition. The Commission wants to maintain the EU’s position as the global leader in renewables, digitalization and de-carbonization as well as improve the technologies’ competitiveness, among others.

At the same time, the Nordic Ministers for Energy have urged technology companies to come forward with suggestions on how to jointly promote clean energy technology exports. And in Finland, the energy department of the Ministry of Economic Affairs and Employment have launched a discussion with the industry on how to best promote Finnish clean energy technology and business related to it.

We in the Nordic countries have long traditions in utilizing biomass. Valmet has based its operations on it; our mission is to convert renewable resources into sustainable results. With the help of Valmet’s process technologies, our customers convert renewable raw materials into pulp, paper and bioenergy. Valmet has unique knowledge in utilizing renewable raw materials – and we play an important role in this field globally. In the field of bioenergy for example, according to McCoy’s statistics, during the years 2008-2017, Valmet supplied more biomass boilers than any other supplier in the world.

Although our success is based on technological excellence, skilled professionals and a global network, the promotion of competitiveness and exports through governments or EU has major significance, too. They contribute to the creation of a supportive business environment for the sector, and help companies e.g. through trade missions to expand business beyond country borders.

But how do we measure competitiveness? The lack of a good indicator is somewhat a problem at times, to put it bluntly. Regional or national decision-makers are often inclined to use trade statistics as a measure of how the companies are succeeding in the global market. For a global company like Valmet, focusing on how many products cross a country’s borders is no longer a valid approach as we have production in many countries and cooperate with many local suppliers close to our customers around the world. Further, as an indicator, this does not reflect at all the value added of the trade to the economies in question. The correct answer would probably be a mix of indicators that would reflect e.g. the selected companies’ share of and development in the market, as well as share of additional related products and services sold.

A message to decision-makers

European technology suppliers need a strong home market to succeed in global competition. We are as competitive globally, as we are in our home market. What does this mean in practice?

Firstly, maintaining technology leadership requires a stable investment environment, that supports long-term investment decisions. The technology bought by the customers will be in operation usually for about 30-40 years onwards. Lock-in phenomenon to unwanted solutions or stranded assets due to changes in legislation are of course far end risks, but things that do cross the minds of the investors today more than some years ago.

Secondly, we need our home market for innovation and demonstration of new solutions. These references are an important platform for global growth.

Thirdly, we need to make sure that necessary resources for education at universities and vocational training are available, because we need to maintain and foster our knowledge base. We do not compete in the markets with lower production costs or raw materials, but with our engineering and technology skills.

Fourthly, we need to develop further cooperation in our value networks in public- private trade promotion activities. This should be based on the companies’ strategies, our customers’ needs and a service mindset.

Lack of European investments can lead to technology development transfer to other regions and leave Europe with no home market expertise in the long run. It is essential to take care and develop further the competitiveness in the global market together.